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Below the Quote on Perspective on Monetary Policy Committee Announcement  by Mr. Nikhil Gupta, Chief Economist, MOFSL Group

RBI keeps repo rate unchanged, CRR cut by 50bps to 4%

CRR cut in two equal tranches, starting 14th and 28th Dec, 24 fortnights

Despite shockingly weak 2QFY25 GDP growth, the RBI did the right thing by keeping repo rate unchanged. Equity market fell and yields rose initially, though the former recovered after CRR cut announcements.

Real GDP growth projections revised down to 6.6% in FY25 (from 7.2% earlier), with 6.8%/7.2%/6.9% in 3Q/4QFY25/1QFY26 (from 7.6%/7.4%/7.3% earlier).

Headline inflation projections are revised up to 4.8% in FY25 (from 4.5% earlier), with 5.7%/4.5%/4.6% in 3Q/4QFY25/1QFY26 (from 4.8%/4.2%/4.3% earlier).

Overall, we appreciate RBIs calmness despite recent GDP data and their focus on long-term objectives. Rate cuts could begin from Feb'25 or later, as we expect GDP growth to disappoint once again.

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